News Releases

Bonterra Energy Corp. Announces Third Quarter 2015 Results

Nov 12, 2015 - 05:45 ET

CALGARY, ALBERTA--(Marketwired - Nov. 12, 2015) - Bonterra Energy Corp. (Bonterra or the Company) (TSX:BNE) is pleased to announce its operating and financial results for the three and nine months ended September 30, 2015. The related unaudited condensed financial statements and notes, as well as management's discussion and analysis (MD&A), are available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on Bonterra's website at www.bonterraenergy.com.

Three Months ended

Nine Months ended

As at and for the periods ended

September
30,

September
30,

September
30,

September
30,

($ 000s except for $ per share)

2015

2014

2015

2014

FINANCIAL

Revenue - realized oil and gas sales (1)

52,160

88,959

152,561

270,754

Funds flow (1)(3)

28,754

57,705

93,902

177,739

Per share - basic

0.87

1.80

2.89

5.57

Per share - diluted

0.87

1.79

2.89

5.54

Payout ratio

52%

50%

52%

47%

Cash flow from operations

36,024

65,705

80,063

171,888

Per share - basic

1.09

2.05

2.47

5.38

Per share - diluted

1.09

2.03

2.47

5.35

Payout ratio

41%

44%

61%

49%

Cash dividends per share

0.45

0.90

1.50

2.64

Earnings before income taxes

746

28,207

7,205

95,472

Net earnings (loss)

(321)

20,983

(4,967)

71,638

Per share - basic

(0.01)

0.65

(0.15)

2.24

Per share - diluted

(0.01)

0.65

(0.15)

2.23

Capital expenditures net of dispositions

14,402

41,205

50,114

133,907

Acquisition(2)

-

-

170,430

-

Total assets

1,200,856

1,080,801

Working capital deficiency

29,080

55,047

Long-term debt

335,863

140,339

Shareholders' equity

610,793

697,337

OPERATIONS

Oil

-barrels per day (1)

9,177

8,874

8,713

8,521

-average price ($ per barrel)

53.26

92.73

55.58

97.27

NGLs

-barrels per day (1)

753

818

740

772

-average price ($ per barrel)

18.05

54.13

20.58

58.13

Natural gas

-MCF per day (1)

19,191

21,981

19,449

22,816

-average price ($ per MCF)

3.36

4.54

3.05

5.17

Total barrels of oil equivalent per day (BOE) (1)(4)

13,129

13,355

12,695

13,096

(1) Nine month figures for 2015 include the results of a purchase ("the Acquisition") of primarily Pembina Cardium oil and gas assets ("Pembina Assets") for the period of April 15, 2015 to September 30, 2015. For the nine months ended September 30, 2015, production includes 168 days for the Pembina Assets and 273 days for Bonterra.

(2) For 2015, includes the Acquisition that closed April 15, 2015 for $170,430,000.

(3) Funds flow is not a recognized measure under IFRS. For these purposes, the Company defines funds flow as funds provided by operations including proceeds from sale of investments and investment income received excluding the effects of changes in non-cash working capital items and decommissioning expenditures settled.

(4) BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

During the third quarter, Bonterra achieved numerous positive operational and strategic developments, despite a challenging environment for energy companies.

Following completion of the Company's mid-year credit facility redetermination, Bonterra's banking syndicate has agreed to maintain the current credit facilities at $425 million as a result of a successful drilling program to date combined with capital and operating cost reductions which offset the negative impact of significantly lower commodity price forecasts. The loan is revolving to April 29, 2016 with a maturity date of April 30, 2017 and positions the Company well to continue its focus on projects that offer the highest rates of return in a weak commodity price cycle.

During the first nine months of 2015, the Company continued to focus on cost reductions across the organization in order to more effectively manage through a continued low commodity price environment. The Company was able to lower capital costs per well by approximately 25 percent, reduce operating costs by 19 percent and general and administrative costs by 37 percent from the comparable period in 2014.

The Company averaged 13,129 BOE per day for the third quarter of 2015. Production was lower than expected by approximately 1,100 BOE per day due to capacity restrictions on the TransCanada pipeline system, insufficient natural gas processing capacity, the delay of well completions in response to low oil prices and the voluntary shut-in of sub-economic production. During the fourth quarter of 2015 the Company will become operator of a third gas plant in the Pembina Cardium area that it has ownership in.

Q3 2015 Highlights:

The Company continued with its Cardium focused capital program in the third quarter by drilling 6 gross (5.9 net) wells, which will be completed and tied-in before the end of the year;

Bonterra achieved Q3 2015 production of 13,129 BOE per day compared to 13,355 in Q3 2014 and 12,743 in Q2 2015. Production for the nine months ended September 30, 2015 was 12,695 BOE per day compared to 13,096 BOE per day for the same period in 2014;

Average Canadian dollar realized commodity prices per barrel of oil were as follows: $53.26 in Q3 2015 compared to $92.73 in Q3 2014 and $55.58 for the nine months ended September 30, 2015 compared to $97.27 for the same period in 2014;

Corporate cash netback per BOE was $23.84 in Q3 2015 compared to $46.07 in Q3 2014 and $25.00 for the nine months ended September 30, 2015 compared to $49.28 for the same period in 2014;

Corporate funds flow for Q3 2015 was $28.8 million compared to $57.7 million in Q3 2014 and $93.9 million for the nine months ended September 30, 2015 compared to $177.7 million for the same period in 2014;

On July 8, 2015 Bonterra closed a private placement of 973,812 common shares to existing shareholders at a price of $32.00 per common share, raising gross proceeds of approximately $31.2 million. The proceeds were initially used to reduce debt; and

Third quarter net debt (includes working capital) to funds flow ratio of 2.9 to 1.0 times on a four quarter trailing basis.

Kindly refer to the "Highlights" and "Quarterly Comparison" sections of the full Q3 2015 quarterly report for further details.

Outlook

It is a volatile period for the oil and gas industry and presently makes it difficult to predict future conditions on a longer term basis. The largest impact items will likely be predicting oil prices and the impact of policies implemented by the new Alberta and Federal governments.

A critical component of the Company's strategy is sustainability through a variety of price cycles. Bonterra has assembled a favorable asset base that makes it possible to operate successfully at low oil prices and with present debt levels. In addition to featuring a low decline rate, the Company's assets provide an inventory of over 14 years of undrilled locations. Given the reduction in costs across the industry, Bonterra has been able to benefit from reduced service, drilling and operating costs, and can effectively do more with less capital. The Company has maintained the view that capital spending and dividend payments will continue to be monitored on an ongoing basis and can be modified on short notice, depending on changes in production volumes, commodity prices and regulatory changes.

Bonterra will continue to pursue opportunities to reduce costs, while prudently allocating capital to the highest potential return projects. Based on the Company's successful drilling results to date, combined with a corporate decline rate of approximately 20 percent, Bonterra is confident that the current dividend can be maintained in a sustained oil price environment of $US45 per bbl through 2016 by operating at 100 percent payout under this scenario and keeping the debt to cash flow ratio stable.

Bonterra Energy Corp. is a conventional oil and gas corporation with operations in Alberta, Saskatchewan and British Columbia. The shares are listed on The Toronto Stock Exchange under the symbol "BNE".

Cautionary Statements

This summarized news release should not be considered a suitable source of information for readers who are unfamiliar with Bonterra Energy Corp. and should not be considered in any way as a substitute for reading the full report. For the full report, please go to www.bonterraenergy.com.

Use of Non-IFRS Financial Measures

Throughout this release the Company uses the terms "payout ratio" and "cash netback" to analyze operating performance, which are not standardized measures recognized under IFRS and do not have a standardized meaning prescribed by IFRS. These measures are commonly utilized in the oil and gas industry and are considered informative by management, shareholders and analysts. These measures may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other companies.

The Company calculates payout ratio by dividing cash dividends paid to shareholders by cash flow from operating activities, both of which are measures prescribed by IFRS which appear on our statements of cash flows. We calculate cash netback by dividing various financial statement items as determined by IFRS by total production for the period on a barrel of oil equivalent basis.

Forward-Looking Information

Certain statements contained in this release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this release includes, but is not limited to: expected cash provided by continuing operations; cash dividends; future capital expenditures, including the amount and nature thereof; oil and natural gas prices and demand; expansion and other development trends of the oil and gas industry; business strategy and outlook; expansion and growth of our business and operations; and maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; credit risks; and other such matters.

All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control.

Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do, what benefits will be derived there from. Except as required by law, Bonterra disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

The forward-looking information contained herein is expressly qualified by this cautionary statement.

Frequently recurring terms

Bonterra uses the following frequently recurring terms in this press release: "bbl" refers to barrel, "NGL" refers to Natural gas liquids, "MCF" refers to thousand cubic feet and "BOE" refers to barrels of oil equivalent. Disclosure provided herein in respect of a BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Numerical Amounts

The reporting and the functional currency of the Company is the Canadian dollar.